Not since the krone shock in connection with the corona shutdown in spring 2020 have we received so few Swedish kroner for a Norwegian hundred. Since the new year, the Swedish krona has become almost 10 per cent more expensive for Norwegians. This makes it more expensive for Norwegians to shop in Sweden. At the same time, it will be cheaper for Swedes to shop in Norway. Higher interest rate in Sverge On Wednesday, the Swedish central bank decided to increase the key interest rate by 0.5 percentage points to 3.5 percent. Here at home, the key interest rate is 3 percent. Olav Chen senior portfolio manager at Storebrand. Photo: ISMAIL BURAK AKKAN / news Portfolio manager Olav Chen at Storebrand points to interest rate differentials as the most important reason why the Norwegian krone is so weak. – Sweden has had a negative interest rate for many years and is considered a country with a low interest rate, while Norway has traditionally had a higher interest rate. Interest rates in Sweden and the eurozone have now surpassed interest rates in Norway. That speaks for a weaker krone, says Chen. More expensive euro and dollar The Norwegian krone has also weakened significantly against the euro and dollar recently. A US dollar costs NOK 10.63, while a euro costs NOK 11.71. For 100 Danish kroner, you have to spend 157.08 kroner. The low krone exchange rate means that everything we import from abroad becomes more expensive. The weak krone also leads to increased costs for the farmers who today presented their demands to the government in the agricultural settlement. – A lot speaks for a weaker krone Currency strategist Magne Østnor at DNB has no simple explanation for why the krone has weakened so much, but he believes that a lot now speaks against a weaker krone, both in the long and short term. Magne Østnor, currency strategist at DNB believes that many elements contribute to pulling the Norwegian krone down. Photo: DNB One is about the short-term and cyclical, while the other is about the more long-term over time. – Since the new year, we have seen the krone weaken a lot and we recognize earlier periods of greater weakening with a lot turning in the krone’s disfavor at the same time, says Østnor. He points to lower interest rate differentials with our trading partners, lower oil prices, lower gas prices, as well as a turbulent time for shares and bonds as reasons for a weakened krone. – We have a period behind us where krone exchanges related to oil revenues and the oil fund have been out of balance with Norges Bank selling more kroner than the oil companies have bought to pay taxes. He also believes that troubled times in the markets contribute to a weakened krone. – We are in a phase where the sharp interest rate increases from the central banks make uncertainty higher than normal, he says. He is supported by Chen in Storebrand – The krone is a small peripheral currency. When uncertainty is high, everyone will own dollars. Then you sell kroner in favor of dollars, says the portfolio manager. Østnor also believes that speculators may have contributed to sending the Norwegian krone even further down. – If there are large movements, there are a number of speculators who like to jump in and reinforce the movements, he believes.
ttn-69
Weakest krone in three years against Swedish kroner – news Norway – Overview of news from various parts of the country
